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13 August 2015

Garuda Indonesia´s Letter of Intent for 30 A350s could be cancelled.

Garuda Indonesia CEO Arif Wibowo signed last June a Letter of Intent with Airbus for 30 A350 XWB aircraft.

But some discussions within Indonesian Government suggest that the future order could be cancelled.

Source: Airbus

The new Coordinating Maritime Affairs Minister Rizal Ramli, on his 1st day in the charge, has asked the national carrier Garuda to cancel the letter of intent signed in June at Le Bourget Airshow for 30 A350 XWBs.

Source: Airbus

The strategic international expansion target of the airline to provide direct flights between Europe and Jakarta or Bali has been questioned fearing that the company would run into financial difficulty again.

Dr. Rizal Ramli would prefer to see Garuda to concentrate on serving domestic routes with single aisle aircraft.

Source: Airbus

“I don't want to bankrupt Garuda-Indonesia because an agreement to buy 30 A350 planes with a loan of 44.5 billion US dollars from the China Aviation Bank.”

Meantime, State-Owned Entreprises Minister Rini Soemarno, who oversees the management of Garuda, told Rizal to back off as the company was not under his authority.

“State-owned enterprises are clearly under the Office of the Coordinating Economic Minister, not under the Office of the Coordinating Maritime Affairs Minister. So no one can intervene in Garuda except for the former,” Rini said.

She defended Garuda’s fleet expansion plan as the company was developing its business.

Based on the article “Day one: New minister Rizal Ramli criticized by fellow minister” published in The Jakarta Post.